Citing a report that shows a growing gap between the highest and lowest wage earners in Pennsylvania, a Harrisburg-based think tank is calling upon state legislators to increase the state's minimum wage.
The report by the Keystone Research Center shows that between the late 1990s and mid 2000s, the annual incomes for the richest 20 percent of Pennsylvania households grew 7.2 percent, while those in the lowest 20 percent decreased by 7.9 percent.
The news isn't much better for middle-income households, which saw a 1.9 percent increase in annual income, according to the report.
That inequality is a sign that Pennsylvania needs to follow the lead of 10 other states that will increase minimum wage for workers effective Jan. 1, said Dr. Stephen Herzenberg, an economist with the Keystone Research Center, a public policy center that conducts research issues that affect citizens' well being.
The middle class is struggling, Herzenberg said. We need to find a way to lift wages of the working family. One of the most powerful ways to do that is to increase the minimum wage.
The last voluntary increase of the minimum wage in Pennsylvania came in 2007, when the rate was increased to $7.15 per hour, Herzenberg said. Two years later, the rate increased to $7.25 to be in compliance with the federal minimum wage that went into effect.
Individual states are free to set a higher rate. Pennsylvania is currently among 32 states that have kept the minimum wage at the federal level. The highest rate is found in Washington state, at $9.04 per hour.
Increasing the minimum wage is a highly controversial topic. Advocacy groups for businesses say increasing the wage is a job killer that impacts mostly small businesses, which can least afford to absorb additional costs.
Increasing the minimum wage does not just affect wage rates – it also affects employer costs by increasing unemployment insurance rates and Social Security taxes, said Jean Card, a spokeswoman for the National Federation of Independent Business, a nonprofit group that advocates for small business. This can worsen an already adverse business environment in which employers bear costs that are already stifling their ability to grow and create jobs.
Herzenberg said a number of studies have found increasing the minimum wage creates jobs by strengthening the economy.
It puts money back in the pocket of mostly lower-income families that spend most of what they earn, he said.
Getting an increase passed is no easy task, however.
In Pennsylvania, Herzenberg said a number of bills seeking to increase the wage have been introduced in the state legislature in the past few years, but none has made it to the House or Senate floor for a vote.
In almost every session you will get a bill. The issue is whether or not it becomes a priority for the governor or legislative leaders, Herzenberg said. Unless a group of powerful legislators or the governor champion a minimum-wage increase, it's hard to get through.
Locally, state Sen. John Yudichak, D-Plymouth Township, said he supported the last minimum wage increase, and would support a responsible increase in the future.
Yudichak said one of his primary concerns is that the majority of minimum-wage earners in the state – roughly 70 percent – are women who are the sole earners for the family.
If we're going to give them a shot at a quality life, we need to make it so they can make a living wage, he said.
At the same time, Yudichak said he's concerned for small business. He'd like to see the state put more emphasis on developing programs that will help them prosper, which, in turn, will create more jobs.
We're always chasing after the large, out-of-state companies to attract them to Pennsylvania. We need to do more for homegrown, mom-and-pop shops, he said. We have 7,000 small businesses in Luzerne County. If we can add just two jobs to those 7,000 businesses, we can cut our unemployment rate in half.